Forecasts for growth in the UK have been lowered by the Bank of England in its latest inflation report.
The Bank says inflation hit zero in March, as previously forecast, driven by falls in energy and food prices. However, the Bank has made minor reductions in forecasts for growth in gross domestic product for the next three years.
2015 is now expected to see maximum growth of 2.6% in GDP, down from 2.9% in the previous inflation report, while the forecast for 2016 also falls from 2.9% to 2.6%.
Similarly, the 2017 forecast has been reduced from 2.7% to a maximum of 2.5%.
The performance would put GDP growth at matching or just below four-year averages. The Bank attributed the revision to revised outlooks for housing investment and productivity.
BoE Governor Mark Carney says: “Productivity is projected to grow only modestly in the year ahead, before returning towards, but remaining below, past average growth rates.
“That recovery reflects a combination of factors. They include the lessening of compositional effects, a pick-up in the reallocation of resources to new and more dynamic firms, and the effects of the investment recovery coming through.”
Source: Money Marketing (published 13 May)